Key trends ahead for the US housing market
The US housing market has struggled for the past two years. Rising interest rates and inflation are the main reasons. Analysts at Zillow have developed a five-year forecast for the sector.
Experts agree that the market will slow down from 2024 to 2028. However, prices are likely to remain at current levels. A slight decline of 0.2% is possible.
Overview of the current situation
The prediction comes from the US News Housing Market Index. The report includes the following talking points:
1. Property prices will remain flat until the end of 2024 despite falling interest rates.
2. There is a supply shortage in the market that will continue until 2030.
3. The shortfall is between 1.5 million and 3.8 million homes.
4. The amount of supply on the market is affected by rising interest rates and other factors.
5. Construction costs have risen, partly due to climate change.
This puts pressure on both developers and buyers. For the latter, taxes and property maintenance costs have increased, as have insurance premiums and utility bills. There is another reason for the continued low level of home sales: a good supply of rental properties is not encouraging potential buyers to buy.
US housing market forecasts for the coming years
Analysts expect house prices to rise as early as 2025. According to forecasts, the cost of property will increase by around 1-2%, taking into account the current rate of inflation. The dynamics are due to the following factors:
– the growth of Americans’ real incomes;
– the reduction in mortgage interest rates;
– increased affordability of housing.
According to experts, co-ownership is becoming increasingly popular among the US population. The idea is to get together with relatives or friends. This approach allows you to reduce the mortgage and maintenance costs. It also provides the opportunity to live in one’s own home rather than renting.
The market recovery trend will continue in 2026. Property costs will rise at a moderate pace. Demand should be satisfied by 2030. By then, the demographic situation will change, and the demand for new housing will decline. This will impact the construction sector, which will slow down.
One of the most critical factors in the market’s development in 2027 will be the active urbanisation of the population. This will lead to an increase in demand for housing in the city. This situation will stimulate the construction of apartment blocks and townhouses. The analysts also pay attention to the mass introduction of technologies. This will encourage remote working. Rural areas and suburbs may be in demand again.
The sector should stabilise in 2028. Housing costs will rise but at a moderate pace. Analysts do not expect insignificant fluctuations in the market as housing becomes more affordable.